Patrick T. Fallon | Bloomberg | Getty Images
Hoses connect laboratory emission testing equipment to a red 2016 Volkswagen AG Golf TDI inside the California Air Resources Board Haagen-Smit Laboratory in El Monte, California.
Volkswagen is taking a surprise $2.95 billion charge in the third quarter because the effort to retrofit or buy back U.S. diesel vehicles that were part of an emissions cheating scandal is more complex than expected.
Announced Friday by the German automaker, the added cost could push Volkswagen’s total damages from the scandal past $30 billion.
The charge will take a bite out of the financial results scheduled for release on Oct. 27, the Wolfsburg-based company said, explaining that the make-good plan in response to the scandal is “proving to be far more technically complex and time-consuming” than anticipated.
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The latest added cost could erase more than half of Volkswagen’s projected $5.3 billion earnings for the third quarter, according to estimates by three financial analysts compiled by Bloomberg.
Volkswagen shares were nearly 1.7% lower Friday in Frankfurt trading.
The scandal involved cheating technology installed on Volkswagen diesel-powered vehicles to circumvent U.S. clean-air emissions standards. In June 2016, Volkswagen agreed to a $14.7 settlement for claims over its U.S. cars equipped with 2-liter diesel engines. The agreement includes plans for buybacks and payments up to $10,000 for each vehicle to owners.
Three months ago, the U.S. Environmental Protection Agency approved planned fixes to Volkswagen’s 2-liter engine diesel cars from 2009 through 2014, including the Jetta, Jetta SportWagen, Golf, Beetle, Beetle Convertible and Audi A3 models.
U.S. vehicles rigged with the emissions-cheating technology represent only part of millions of other Volkswagen diesel cars linked to the scandal worldwide.
The latest financial hit comes as Volkswagen tries to pivot away from combustion engines. Earlier in September, the company joined fellow German automaker Daimler in announcing plans for long-range electric vehicles in a bid to compete with electric cars made by Tesla, General Motors, Nissan and other global auto companies.